Explain the principle of vested interest.
Vested Interest (Sec. 19 TPA)
An interest is said to be vested when it is not subject to any condition precedent or when it is to take effect immediately or on the happening of an event which is certain. A person takes a vested interest in property when he acquires a proprietary right in it but the right of enjoyment is deferred till a future event happens which is certain to happen.
A transfer of a property in favour of a person simply confers a vested interest with an immediate right to the possession and enjoyment of the property.
When an interest is vested, it becomes the property of the transferee and is under sec. 6 transferable by him even before he has obtained possession.
Death of the person who is having this interest will not have any effect over that interest as after the deceased, the interest will vest in his legal heirs.
In the case of Lachman v. Baldeo (1919) 21 OC 312, a person transferred a deed of gift in favour of another person but directed him that he will not get the possession of that property until the transferor himself dies. The transferee will have a vested interest even though his right of enjoyment is postponed.
Characteristics of Vested Interest:
1) Vested interest creates a present right that is in effect immediately, although the enjoyment is postponed to the time prescribed in the transfer. It does not entirely depend on the condition as the condition involves a certain event.
2) Death of transferee will not render the transfer invalid as the interest will pass on to his legal heirs.
3) Vested interest is a Transferable and heritable right.
Vested Interest of Unborn Person
Section 20 of the Transfer of Property Act, 1882 states about vested interest to an unborn child. The interest in the property will be vested in him once he is born. The unborn child may not get the right of enjoyment of the property immediately after having vested interest.